Correlation Between ICL Israel and Gilat Satellite
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Gilat Satellite at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ICL Israel and Gilat Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICL Israel Chemicals and Gilat Satellite Networks, you can compare the effects of market volatilities on ICL Israel and Gilat Satellite and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ICL Israel with a short position of Gilat Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Gilat Satellite.
Diversification Opportunities for ICL Israel and Gilat Satellite
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ICL and Gilat is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Gilat Satellite Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilat Satellite Networks and ICL Israel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ICL Israel Chemicals are associated (or correlated) with Gilat Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilat Satellite Networks has no effect on the direction of ICL Israel i.e., ICL Israel and Gilat Satellite go up and down completely randomly.
Pair Corralation between ICL Israel and Gilat Satellite
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to under-perform the Gilat Satellite. But the stock apears to be less risky and, when comparing its historical volatility, ICL Israel Chemicals is 1.1 times less risky than Gilat Satellite. The stock trades about -0.01 of its potential returns per unit of risk. The Gilat Satellite Networks is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 199,800 in Gilat Satellite Networks on November 2, 2024 and sell it today you would earn a total of 53,500 from holding Gilat Satellite Networks or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Gilat Satellite Networks
Performance |
| Timeline |
| ICL Israel Chemicals |
| Gilat Satellite Networks |
ICL Israel and Gilat Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Gilat Satellite
The main advantage of trading using opposite ICL Israel and Gilat Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Gilat Satellite can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gilat Satellite will offset losses from the drop in Gilat Satellite's long position.| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Teva Pharmaceutical Industries |
| Gilat Satellite vs. Elbit Systems | Gilat Satellite vs. Tower Semiconductor | Gilat Satellite vs. Kamada | Gilat Satellite vs. Delek Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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